Mississippi is drowning in red ink according to a recent report by non-partisan budget policy group, Truth in Accounting (TIA).
The ninth annual report, called the Financial State of the States, uses data from each state’s comprehensive annual financial report to determine the financial standing of each. Mississippi was rated as a “sinkhole” state, which means its $5.7 billion in assets are not enough to cover its $14 billion in liabilities.
If Mississippi taxpayers had to pay the bill themselves, each one of us would owe $11,300.
The biggest component of our debt is in bonds, according to the report. Some of these have been used appropriately for long-term capital projects such as improvements to the state’s community colleges and universities and upcoming local infrastructure improvements under a recent plan that became law after the Legislature’s productive special session.
Not all of the spending is legitimate. The annual practice of a “Christmas Tree” bond bill festooned with wasteful pork goodies by legislators has added to the taxpayers’ credit card without the money being spent on long-term projects.
The other big chunk of the state’s debt is the Public Employees Retirement System of Mississippi and its unfunded liability, which TIA says is $5.8 billion or one year of the state’s tax revenues.
This means the annual appropriation for debt service is getting larger, crowding out money that’d be available for essential services or even provide a tax cut.
The news isn’t all bad. Credit rating firms Moody’s and Standard and Poor’s have recently upgraded Mississippi’s rating from negative to stable. This means that taxpayers will get better deals on borrowing.
The state needs to get a handle on its debt. Lawmakers need to reserve bond money for long-term capital projects, not pork projects whose benefits won’t last until the bonds are paid. They also need to figure out a solution to fix the state’s pension system to keep promises to retirees while ensuring there will be a system intact for present workers.
Interest rates have increased significantly over the past two years as the Federal Reserve has started normalizing rates. This is good for savers, but it means increased costs for borrowers. State governments need to take notice.